Economics Homework Help

If there is a decrease in personal taxes, the correct sequence of events is

 a. a decrease in taxes

increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and price level.

 b. a decrease in taxes increases disposable income which shifts AD to the right increasing output and decreasing price level.

 c. a decrease in taxes shifts AD to the right increasing output and price level.

 d. a decrease in taxes increases consumer spending which shifts AD to the right increasing output and price level.

 e. a decrease in taxes increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and decreasing price level.